Google EU fine sends shockwaves across tech

The massive fine that the European Union levied against
Google on Tuesday is sending shockwaves across the tech industry, highlighting
the intense regulatory scrutiny that companies face when doing business across
the Atlantic.

The EU’s executive body, the European Commission, imposed
a record $2.7 billion penalty on Google after a seven-year investigation into
whether the company was promoting its own comparison shopping tool over those
of its competitors in search results.

“What Google has done is illegal under EU antitrust
rules,” said EU competition policy chief Margrethe Vestager. “It denied other
companies the chance to compete on the merits and to innovate. And most
importantly, it denied European consumers a genuine choice of services and the
full benefits of innovation.”

Google is also facing two other EU investigations into
similar practices on its mobile and advertising services — all of which could
have major repercussions for regulators around the world.

“European consumers are now poised to enjoy better
protections than U.S. consumers,” said Luther Lowe, vice president of public
policy at Yelp, which has been fighting with Google for years over its search
practices.

“This acts as a forcing mechanism for other antitrust
cops across the globe. They’ll ask, ‘Why don’t consumers in my country have
those same protections?’ As such, this important move by the European
Commission can be viewed as the first of many dominoes to fall.”

In a statement, Google general counsel Kent Walker
defended the company’s practices and said that it was considering its next
steps after the EU decision.

“We respectfully disagree with the conclusions announced
today,” Walker said. “We will review the Commission’s decision in detail as we
consider an appeal, and we look forward to continuing to make our case.”

Other U.S. tech giants could be next in line for severe
fines. Facebook and Amazon have been under scrutiny from Europe’s regulators,
and Apple was recently ordered by the EU to pay $14.5 billion in back taxes to
Ireland.

Back in the U.S., the picture looks much different, with
federal regulators known for taking a light-handed approach.

The Federal Trade Commission (FTC) conducted its own
investigation into Google’s search practices before voting unanimously in 2013
to end the probe without imposing any fine.

There are a number of theories as to why tech companies
face more regulatory scrutiny in Europe than in the U.S. Critics of the EU
approach have accused the continent’s leaders of promoting protectionism.

“Their efforts over the last 20 years to regulate their
way into the internet economy have all failed,” said Larry Downes, project
director at Georgetown’s Center for Business and Public Policy.

“This is all they’ve got left — to punish successful American
and Chinese companies in the hope that will somehow help them build their own
internet economy.”

But advocates for a more interventionist approach to
antitrust law in the U.S. say administrations from both political parties have
largely failed to crack down on what they see as anticompetitive behavior.

The EU fine appears to be the biggest antitrust action
taken against a tech company since 2001, when Microsoft agreed to overhaul its
practices in order to settle a costly, drawn-out lawsuit brought by the
Department of Justice. Many believe that settlement helped clear the way for
internet companies like Google to flourish.

Matt Stoller, who studies antitrust policy at New America
and advocates for greater scrutiny of large companies, says that the hands-off
approach in the U.S. is “deeply embedded in both parties.”

“I think it’s because the Europeans have kept up the
antitrust tradition and the Americans have not,” Stoller said.

“Aside from the Microsoft case … you’ve seen a pretty
poor showing [in the U.S.] for a really long time, but that’s not true in
Europe, where they take competition policy more seriously.”

It remains to be seen whether the Trump administration
will ramp up regulatory oversight of Google and other tech companies. The
federal agencies responsible for antitrust issues are said to be understaffed,
and Trump has yet to name his pick to lead the FTC.

Many on the right have long been critical of Google and
its ties to Democrats, and Trump may be under pressure from some in the GOP to
go after the search giant.

Given the president’s volatility on many issues,
antitrust experts steer clear of trying to predict how this administration will
approach tech’s antitrust concerns.

But few doubt that the EU’s decision will impact the
U.S., possibly creating an opening for Google foes like Yelp or Oracle to take
their grievances to domestic regulators.

“You can no longer just say, ‘Those concerns about
anticompetitive conduct are just purely theoretical,’ you can point to the
European Commission basically finding Google guilty,” Stoller said. “American
courts don’t have to recognize that as binding precedent, but they can’t ignore
that it happened.”

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